Buying Foreclosed Real Estate With No Money Down

Properties that have been foreclosed are often a gold mine for any experienced or novice investor in real estate. Typically, properties that have been foreclosed are sold by the bank or financial institution for a price well under the current market value. This means that anyone that can purchase and repair the property can earn huge profits when they resell it.

Most individuals avoid looking at foreclosure properties because they believe they need impeccable credit and huge amounts of investment capital. However, there are effective ways that any investor in real estate can purchase foreclosed properties with virtually no credit and no money down.

Finding the Properties

Properties that are distressed in the community are those that are about to go through foreclosure sale. Any notice of a foreclosure sale will be posted on a board in the County Clerk’s office, in the county with a distressed property is located. This is because it is a public record that a foreclosure sale is about to take place.

Typically, the best time to locate the new list of foreclosure sales is the first Tuesday of the month. This is the time when the last huge batch of properties that were foreclosed had been sold at auction, typically on the steps of the County Courthouse, or at the Sheriff’s office. It is then that a new list of any upcoming foreclosure sales will be clearly posted.

Contacting the Financial Lender

On the list of foreclosures will be another list of lenders that are owed monies on the property, and have called for the property to be foreclosed. Make direct contact with the financial lender and offer a proposal to assume the loan on the property without the need to qualify. The loan assumption without the need to qualify simply means that you will be willing to take over any current and future mortgage payments for the lending institution.

However, your proposal to assume the debt requires that the bank not qualify you based on any credit check. Typically, small lending institutions will agree to this format if you have the ability to prove that you have a minimum of three months reserve payments.

Contact the Property Owners

Before the foreclosure sale begins, make direct contact with the owners of the distressed property. Typically this can be done by simply visiting the home. Speak to the owners directly about assuming the loan from the lending institution. Explain that once the payments have been wiped out, the property will be transferred to you instead of sold at auction, allowing them to avoid the foreclosure. This will help them avoid any damage to their credit history.

Write up an agreement to make a purchase for the loan assumption. Once the assumption is approved by the lender, you can then move to escrow, and close on your new property. Once the entire process has been completed, you will receive the keys to your new home, and the lending institution will have transferred the title or deed of the property directly into your name.